In this FDD Talk post, you’ll learn the following:

• Section I – Estimated initial investment (franchise costs) for a Fastest Labs franchise, based on Item 7 of the company’s 2022 FDD

• Section II – Initial franchise fee, royalty fee, and marketing fee for a Fastest Labs franchise, based on Items 5 and 6 of the company’s 2022 FDD

• Section III – Number of franchised and company-owned Fastest Labs outlets at the start of the year and the end of the year for 2019, 2020, and 2021, based on Item 20 of the company’s 2022 FDD

• Section IV – Background information on the Fastest Labs franchise opportunity, including relevant news updates

• Section V – Presentation and analysis of Fastest Labs’ financial performance representations (average revenues and/or profits), based on Item 19 of the company’s 2022 FDD, including information on the:

• date opened and city and state for each of the 36 Franchised Locations in the Reporting Group (i.e., (i) have been in operation for at least 12 months as of December 31, 2021; (ii) utilize Fastest Labs’ required customer relationship management software; (iii) had a Managing Owner that attended all mandatory conferences and training programs in calendar year 2021; (iv) complied with the required monthly Search Engine Optimization and Keywords expenditure requirements; (v) utilize Fastest Labs’ required website marketing platform; and (vi) utilize Fastest Labs’ required sales processes)

• 2021 gross revenue, cost of goods sold and contract labor, gross profit, core operating expenses, franchise related adjustments, total adjusted expenses, and adjusted earnings for the one Affiliate Location in the Reporting Group

• average weekly tests and average ticket during the 2021 calendar year for the one Affiliate Location in the Reporting Group

• 2021 average, median, highest, and lowest gross revenue for the top 1/3, middle 1/3, bottom 1/3, and all 36 Franchised Locations in the Reporting Group

• 2018 to 2021 Affiliate Location gross revenue, Franchised Locations gross revenue, and Systemwide gross revenue reported by the respective Systemwide Reporting Group (including the Excluded Outlets and those outlets that were open for less than 12 months in each respective calendar year so long as the Franchised Locations were open as of the end of the fiscal year)

• Section VI – Key ratios, comparables, computations, and analyses for the Fastest Labs franchise opportunity (exclusive content for Platinum subscribers)

Section I – Fastest Labs Franchise Costs

• Fastest Labs franchise costs, based on Item 7 of the company’s 2022 FDD:

• Initial Franchise Fee:  $49,500
• Airfare and Living Expenses While Training:  $750 to $1,500
• Lease and Utility Security Deposits:  $1,500 to $3,500
• Exterior Signage and Installation:  $5,000 to $9,000
• Office Equipment:  $2,500 to $4,000
• Initial Testing Equipment:  $3,100 to $3,700
• Insurance and Miscellaneous Opening Expenses:  $1,800 to $2,800
• Computer Hardware and Software:  $6,000 to $7,200
• Start-Up Kit and Uniforms:  $1,000 to $1,500
• Additional Funds (3 months):  $20,000 to $40,000
• Total Fastest Labs Franchise Costs:  $91,150 to $122,700

Section II – Fastest Labs’ Initial Franchise Fee, Royalty Fee, and Marketing Fee

• Fastest Labs’ initial franchise fee, royalty fee, and marketing fee, based on Items 5 and 6 of the company’s 2022 FDD:

• Initial Franchise Fee:  $49,500
• Royalty Fee:  greater of 7% of Gross Revenue or the Minimum Royalty due. The Minimum Royalty is not due for the first 6 months of operation. After this grace period, the Minimum Royalty will be equal to $500 per month.
• National Brand Fund:  up to 2% of monthly Gross Revenue
• Local and Regional Advertising Cooperatives:  established by cooperative members, up to 2% of Gross Revenue

Section III – Number of Franchised and Company-Owned Fastest Labs Outlets

Franchised

2019

• Outlets at the Start of the Year:  32
• Outlets at the End of the Year:  41
• Net Change:  +9

2020

• Outlets at the Start of the Year:  41
• Outlets at the End of the Year:  54
• Net Change:  +13

2021

• Outlets at the Start of the Year:  54
• Outlets at the End of the Year:  61
• Net Change:  +7

Company-Owned

2019

• Outlets at the Start of the Year:  1
• Outlets at the End of the Year:  1
• Net Change:  0

2020

• Outlets at the Start of the Year:  1
• Outlets at the End of the Year:  1
• Net Change:  0

2021

• Outlets at the Start of the Year:  1
• Outlets at the End of the Year:  1
• Net Change:  0

Section IV – Background Information on the Fastest Labs Franchise

13 Things You Need to Know About the Fastest Labs Franchise

Accelerates Franchise Development, Approaches Major Milestone of 100 Signed Agreements

1.  In late June 2021, Fastest Labs announced that it has accelerated development efforts, with the goal of reaching 100 signed agreements and 75 locations by the end of 2021. The brand sat at 59 locations – with 85 franchise agreements signed and more than 12 in development – across 23 states. During the first half of 2021, the drug, alcohol, and DNA testing franchise signed 13 franchise agreements, on the fast track to having a historic, record-breaking year as it neared major milestones while breaking into new states across the country.

2.  Fastest Labs started the year with impressive first and second quarters with nine new signed franchise agreements, including expansion to three new states – Tennessee, Virginia, and Idaho, all of which add to nearing its milestone goal of hitting 100 signed agreements by year-end. Other major deal signings include existing franchisees in California, Texas, and Washington purchasing second territories with plans to open within the next 9-12 months – a true testament to the brand’s success.

3.  By the end of 2021, Fastest Labs aimed to have 75 open and operating locations, and through extensive research and demographic studies, is actively seeking strategic franchise partners to develop in cities including but not limited to Albuquerque, Des Moines, Detroit, Indianapolis, Jackson, Kansas City, Las Vegas, Little Rock, New Orleans, Oklahoma City, and Tulsa.

4.  The Fastest Labs leadership team continues to prioritize support and innovation to help franchisees achieve long-term success in their communities. One successful program is aptly titled Franchise Support Initiative 12 (FSI XII). Each month, new initiatives and support tools are rolled out to assist franchisees in their day-to-day operations. Examples include a ticketed support system that tracks franchisee requests and ensures they are met, hiring of two additional support staff members, a uniform training system across every location, franchise coaches, marketing collateral, and more.

5.  More recently, Fastest Labs has launched an all-new sales initiative called Mach One. The goal of this four-prong initiative is to accelerate each franchisee location sales to $1M in gross annual sales as part of the company’s five-year plan. Furthermore, Fastest Labs has invested in a partnership with ZoomInfo to help franchise owners reach this goal by accelerating their customer base through comprehensive, tech-forward sales and marketing tactics.

6.  Through intuitive data, franchisees will be able to see if companies and consumers are searching for keywords surrounding drug testing, tap into specific zip codes, and provide franchisees with key contact info and demographics so they can quickly send proposals and acquire new business.

7.  Dave Claflin, founder and CEO of Fastest Labs, said, “By investing in and maximizing our technology, we are helping franchisees raise their sales. These initiatives will not only increase average unit volume, but also drive franchise development as we enter a new era of growth.”

Ranked in Franchise Business Review’s Culture100 Awards 2021

8.  In mid-August 2021, Fastest Labs was included as one of the top 100 franchises of Franchise Business Review’s Culture100 Awards 2021. Over 28,000 franchise owners from 224 brands were surveyed on leadership, mission, community, and overall satisfaction of franchisees to find the top companies who put culture first. This accolade comes after Fastest Labs was also named in the Top 100 Best Recession-Proof Businesses to Start in 2021 list by Franchise Business Review earlier last year.

9.  According to Dave Claflin, founder and CEO of Fastest Labs, “Culture is the single most important asset a company possesses and so it’s a true honor to be recognized as a top culture franchise by Franchise Business Review. Our top priority is ensuring our franchisees feel like they’re family, and we strive to provide them with the resources and training they need to continue to grow and succeed. In an effort to help franchisees, we have created several new initiatives and technology to support future sales growth. We wouldn’t have this great culture without our amazing franchisees. They believe in our values as a business, and continue to impress us with their hard-working mentalities – it’s rewarding to see all this hard work being recognized by the franchise industry.”

10.  The 2021 Franchise Culture100 Awards list identifies the franchise brands that are creating a winning culture among its franchise owners. The ranking is based on a series of questions that focus on leadership, core values, honesty, integrity, and overall support. Franchisees were also asked a number of key metric questions that helped showcase their level of happiness with the franchise.

Company History

11.  Fastest Labs was founded in 2008 by Dave Claflin and his wife LeDona in San Antonio, Texas. Initially, Fastest Labs was established as a new division of the Texas-based corporation, Enhouse America Inc., called LabWork NOW Drug Testing. The company quickly became one of the leading testing labs in the country.

12.  As demand grew for the company’s services, Claflin and LeDona began franchising under the name Fas-Tes Franchise Systems, LLC. Over the next few years, the company grew quickly and changed its name to Fastest Labs. By 2020, Fastest Labs had 72 franchises open across 20 states.

Entrepreneur’s Franchise 500

13.  Fastest Labs ranked No. 436 on Entrepreneur’s 2022 Franchise 500 list.

Section V – Financial Performance Representations (Average Revenues and/or Profits) for the Fastest Labs Franchise (Item 19, 2022 FDD)

• As of December 31, 2021, Fastest Labs had 61 franchised Fastest Labs franchises (“Franchised Locations”) and one affiliate-owned Fastest Labs location (“Affiliate Location”).

• The information below in Parts 1 through 4 is a historical financial performance representation for the one Affiliate Location and 36 Franchised Locations (“Reporting Group”) that: (i) have been in operation for at least 12 months as of December 31, 2021; (ii) utilize Fastest Labs’ required customer relationship management software; (iii) had a Managing Owner that attended all mandatory conferences and training programs in calendar year 2021; (iv) complied with the required monthly Search Engine Optimization and Keywords expenditure requirements; (v) utilize Fastest Labs’ required website marketing platform; and (vi) utilize Fastest Labs’ required sales processes (the “Reporting Criteria”).

• 25 of the Franchised Locations did not meet the Reporting Criteria (“Excluded Outlets”) and are not included in this Item 19. Seven of the Excluded Outlets were not open for the entire 2021 calendar year. Eighteen of the Excluded Outlets were excluded for not meeting the Reporting Criteria as the Franchised Outlets do not operate in compliance with Fastest Labs’ current System and requirements for Fastest Labs Businesses.

• In addition to the historical performance of the Reporting Group, Fastest Labs also includes systemwide data for all Fastest Labs Businesses operating as of year-end (each, a “Systemwide Reporting Group”) in calendar years 2018 to 2021 as described further in the notes to Part 5. Fastest Labs refers to each calendar year as a “Reporting Period.”

• The financial performance information for the Affiliate Location was taken from its unaudited profit and loss statement for 2021. The financial performance information for the Franchised Locations was taken from reports submitted to Fastest Labs. Fastest Labs has not audited this information but has no reason to doubt its accuracy.

• The financial performance information for both the Affiliate Location and the Franchised Locations was prepared on a cash basis of accounting. Fastest Labs has presented the financial performance information of the Franchised Locations separate from that of the Affiliate Location below. All figures have been rounded to the nearest dollar.

• Franchised Fastest Labs Businesses will share many of the same characteristics as Fastest Labs’ Affiliate Location, including degree of competition and services offered, except that the Affiliate Location does not pay the Royalty Fee or Technology Fee.

• Fastest Labs has not yet established the National Brand Fund or Technology Fee. The Affiliate Location will pay the Technology Fee once established. The Affiliate Location will not pay the National Brand Fund and is not subject to the monthly Keywords and Search Engine Optimization expenditure.

Part 1 – Overview of Franchised Locations in the Reporting Group

• In Part 1 below, Fastest Labs provides an overview of certain characteristics of the Franchised Locations in the Reporting Group. Fastest Labs describes the date opened and city and state for each Franchised Location in the Reporting Group.

• May 2012:  San Antonio, TX
• December 2012:  Austin, TX
• September 2013:  Columbus, OH
• June 2014:  Woodlands, TX
• June 2015:  Houston, TX
• March 2017:  Pittsburg, PA
• August 2017:  Addison, TX
• February 2018:  Houston, TX
• June 2018:  Cincinnati, OH
• August 2018:  Cary, NC
• August 2018:  Dayton, OH
• October 2018:  Torrance, CA
• November 2018:  Charlotte, NC
• November 2018:  Greensboro, NC
• April 2019:  Alpharetta, GA
• May 2019:  Webster, TX
• June 2019:  Bloomington, MN
• July 2019:  Boston, MA
• August 2019:  Salt Lake City, UT
• September 2019:  McAllen, TX
• September 2019:  Houston, TX
• October 2019:  Louisville, KY
• October 2019:  Omaha, NE
• October 2019:  Marietta, GA
• January 2020:  Tempe, AZ
• May 2020:  Houston, TX
• May 2020:  Charlotte, NC
• May 2020:  New Braunfels, TX
• June 2020:  Fort Worth, TX
• June 2020:  Plymouth, MN
• October 2020:  Plano, TX
• October 2020:  Columbus, GA
• October 2020:  Tacoma, WA
• November 2020:  Ft. Collins, CO
• November 2020:  Draper, UT
• January 2021:  San Antonio, TX

• “Date Opened” refers to the date each Franchised Location opened to the public and does not include the date of any subsequent transfer of the outlet.

• The San Antonio, Texas Franchised Outlet opened January 1, 2021 and operated for the entirety of the 2021 Reporting Period.

Part 2 – Gross Revenue, Gross Profit, and Net Profit for the Affiliate Location During the 2021 Reporting Period

• The information provided in Parts 2 and 3 below consists of the actual performance of the Affiliate Location.

• Because the Affiliate Location is under Fastest Labs’ control, Fastest Labs is able to obtain detailed information that it is unable to obtain from franchisees. Franchised Locations may or may not have similar expenses and they may have additional expenses to the ones listed below.

• The numbers have been rounded to the nearest dollar for sake of presentation.

Gross Revenue:  $584,659 (100%)

Less:  Cost of Goods Sold and Contract Labor:  $172,267 (29.46%)

Gross Profit:  $412,392 (70.54%)

Expenses

Core Operating Expenses

• Advertising and Business Promotion:  $14,618 (2.5%)
• Bank Charges and Fees:  $8,695 (1.5%)
• Insurance: Building, Worker’s Compensation, and General Liability Insurance:  $1,988 (0.3%)
• Office Supplies:  $10,552 (1.8%)
• Professional Services:  $1,600 (0.3%)
• Rent:  $32,500 (5.6%)
• Payroll (excluding Manager’s and Owner’s salary and Owner’s draw):  $75,556 (12.9%)
• Security:  $665 (0.1%)
• Seminars, Safety, and Training:  $650 (0.1%)
• Payroll Taxes:  $19,553 (3.3%)
• Total Core Operating Expenses:  $166,377 (28.5%)

Franchise Related Adjustments (Imputed)

• Royalty Fee:  $40,926 (7%)
• Technology Fee:  $2,400 (0.41%)
• Total Adjusted Expenses:  $209,703 (35.87%)

Adjusted Earnings:  $202,689 (34.67%)

• “Gross Revenue” means the aggregate amount of all sales of services and products, and the aggregate of all charges for services performed by the Fastest Labs Business net of discounts and bad debts.

• “Cost of Goods Sold and Contract Labor” equal the costs of purchases and contract labor paid by the Affiliate Location.

• “Gross Profit” equals Gross Revenue less Cost of Goods Sold and Contract Labor.

• “Core Operating Expenses” includes those operating expenses actually incurred by Fastest Labs’ Affiliate Location that Fastest Labs anticipates its franchisees will also incur. This includes the following operating expenses: payroll for non-owners and managers; advertising; business promotion; bank charges and fees; entertainment; insurance; office supplies; professional services; rent; security; payroll taxes; and utilities.

• This category does not include the following operating expenses and non-operating expenses actually incurred by the Affiliate Location (the “Excluded Operating Expenses”): (i) owner’s salary and draws (as well as the associated taxes) made by the owner of the company, which totaled $73,477.74; (ii) administrative costs paid to Fastest Labs’ payroll provider, which totaled $4,982.81 (Fastest Labs expects Fastest Labs Businesses to conduct their own payroll); (iii) 401k costs Fastest Labs paid to employees, which totaled $24,520.82; (iv) costs the Affiliate Location incurred in providing health insurance to its employees, which totaled $3,680.26; (v) manager’s salary and bonus totaling $101,724; (vi) entertainment; (vii) meals; and (viii) taxes (except for payroll tax).

• Fastest Labs does not expect Fastest Labs Business owners to provide health insurance or 401k contributions to their employees. The manager’s salary and bonus were excluded as the salary and bonus were above market, and Fastest Labs does not anticipate all franchisees will employ both a manager and an owner in a full-time role. Expenses relating to meals ($99.59) and entertainment ($2,535.63) have been excluded as these expenses are discretionary.

• Franchise-Related Adjustments: Fastest Labs has added a Royalty Fee of 7% and a Technology Fee of $200 per month that franchised Fastest Labs Businesses will pay, but that are not charged to Fastest Labs’ Affiliate Location.

• Fastest Labs did not impute the monthly marketing expenditures for Keywords and Search Engine Optimization because the Affiliate Location spent more than the required amount on these advertising expenditures.

• The financial performance representations in Part 2 do not reflect all operating expenses, cost of services provided, and other costs or expenses that must be deducted from the Total Sales figures, including the Excluded Expenses and non-operating expenses, to obtain net income or profit. You should conduct an independent investigation of the costs and expenses you will incur in operating your Fastest Labs Business.

• “Adjusted Earnings” equals Gross Profit less the Adjusted Expenses (i.e., the Core Operating Expenses and Franchise-Related Adjustments). Adjusted Earnings does include the deduction Excluded Operating Expenses or the following non-operating expenses: taxes (except for payroll taxes), interest, depreciation, amortization. Adjusted Earnings is not equal to Net Income.

• In making the Franchise Related Adjustments, Fastest Labs assumed that any additional expenses would not have a direct or indirect material effect on revenue or other expenses.

• Some outlets have sold this amount. Your individual results may differ. There is no assurance that you’ll sell as much.

Part 3 – Average Weekly Tests and Average Ticket for Affiliate Location During the 2021 Reporting Period

• Average Weekly Tests:  207
• Average Ticket:  $57

• “Average Weekly Tests” is calculated by determining the total number of unique tests provided to customers during the 2021 Reporting Period and dividing this figure by 51. The Affiliate Location was open and operational for 51 weeks during the 2021 Reporting Period,

• “Average Ticket” is calculated by dividing the total Gross Revenue reported by the Affiliate Location for the Reporting Period by the number of tests completed during the 2021 Reporting Period.

• All numbers are rounded.

• Some outlets have sold this amount. Your individual results may differ. There is no assurance that you’ll sell as much.

Part 4 – Gross Revenue for the Franchised Locations in the Reporting Group During the Reporting Period

All Franchised Locations in the Reporting Group

• Average Gross Revenue:  $203,502
• Highest Gross Revenue:  $389,643
• Lowest Gross Revenue:  $108,066
• Median Gross Revenue:  $178,555
• Number and Percentage That Met or Exceeded Average:  15 of 36 (42%)

Top 1/3 (32.6%) Gross Revenue

• Average Gross Revenue:  $296,423
• Highest Gross Revenue:  $389,643
• Lowest Gross Revenue:  $243,376
• Median Gross Revenue:  $290,962
• Number and Percentage That Met or Exceeded Average:  5 of 12 (42%)

Middle 1/3 (32.6%) Gross Revenue

• Average Gross Revenue:  $183,125
• Highest Gross Revenue:  $237,766
• Lowest Gross Revenue:  $150,594
• Median Gross Revenue:  $178,555
• Number and Percentage That Met or Exceeded Average:  5 of 12 (42%)

Bottom 1/3 (34.9%) Gross Revenue

• Average Gross Revenue:  $130,959
• Highest Gross Revenue:  $146,870
• Lowest Gross Revenue:  $108,066
• Median Gross Revenue:  $134,556
• Number and Percentage That Met or Exceeded Average:  6 of 12 (50%)

• “Gross Revenue” means the aggregate amount of all sales of services and products, and the aggregate of all charges for services performed by Fastest Labs Businesses in the Reporting Group net of discounts and bad debts.

Part 5 – Systemwide Gross Revenue for the Systemwide Reporting Groups in Calendar Years 2018 to 2021

2018

• Affiliate Location Gross Revenue:  $449,566
• Franchised Locations Gross Revenue:  $3,684,529
• Systemwide Gross Revenues:  $4,134,095
• Year-Over-Year Growth (Systemwide):  n/a
• Systemwide Reporting Group Size:  33

2019

• Affiliate Location Gross Revenue:  $496,823
• Franchised Locations Gross Revenue:  $4,722,323
• Systemwide Gross Revenues:  $4,722,323 (note: this figure does not include the affiliate location gross revenue)
  
• Year-Over-Year Growth (Systemwide):  14.2%
  
• Systemwide Reporting Group Size:  42

2020

• Affiliate Location Gross Revenue:  $466,234
• Franchised Locations Gross Revenue:  $5,974,537
• Systemwide Gross Revenues:  $5,974,537 (note: this figure does not include the affiliate location gross revenue)
  
• Year-Over-Year Growth (Systemwide):  26.5%
  
• Systemwide Reporting Group Size:  55

2021

• Affiliate Location Gross Revenue:  $603,807
• Franchised Locations Gross Revenue:  $9,318,702
• Systemwide Gross Revenues:  $9,318,702 (note: this figure does not include the affiliate location gross revenue)
• Year-Over-Year Growth (Systemwide):  56.0%
  
• Systemwide Reporting Group Size:  62

• Fastest Labs defines “Systemwide Gross Revenue” as the sum of all Gross Revenue reported by the respective Systemwide Reporting Group (including the Excluded Outlets and those outlets that were open for less than 12 months in each respective calendar year so long as the Franchised Locations were open as of the end of the fiscal year).

• As used in Part 5, “Franchised Locations Gross Revenue” refers to the total of all Gross Revenue produced by Franchised Locations during the calendar year, which were active and operational as of the end of the calendar year.

• “Year-Over-Year Growth” refers to the year-over-year percent change when comparing the Systemwide Gross Revenue of a Reporting Period as compared with the Systemwide Gross Revenue reported in the previous Reporting Period. Year-Over-Year Growth is based on the total Systemwide Gross Revenue reported in each Reporting Period and does not reflect the individual year-over-year percent change in Gross Revenue for Franchised Locations or the Affiliate Location in each Systemwide Reporting Group.

• Some outlets have earned this amount. Your individual results may differ. There is no assurance that you’ll earn as much.

Section VI – Fastest Labs Franchise Ratios, Comparables, Computations, and Analyses (Exclusive Content for Platinum Subscribers) ⬇️